Federal Circuit Broadens Hatch-Waxman Safe Harbor

By Mari SerebrovWashington Editor

WASHINGTON – In vacating a preliminary injunction that protected Momenta Pharmaceuticals Inc.'s $1 billion a year monopoly on generic Lovenox, the Federal Circuit gave the makers of generic drugs a much wider safe harbor under Hatch-Waxman.

Drugmakers typically use the safe harbor to freely infringe brand patents to develop generics that can then be approved and marketed as soon as patent protection ends for the brand product. But in Friday's split decision, the U.S. Court of Appeals for the Federal Circuit expanded that safe harbor to any use, including post-approval, that is "reasonably related to the development and submission of information under a federal law which regulates the manufacture, use or sale of drugs."

The decision sinks the long-held notion that once regulatory approval was granted by the FDA, the safe harbor closed, Mary Webster, a patent attorney with Nixon Peabody, told BioWorld Today.

While the precedent-setting ruling may make for smoother sailing for some drugmakers, it could be a shipwreck for those with patented test methods used in manufacturing. The decision will make those patents worthless, Chief Judge Randall Rader warned in his dissent.

Momenta President and CEO Craig Wheeler agreed. Besides being a setback for Momenta, the ruling has "potentially wide-ranging implications for all patent holders," he said.

Momenta, together with its partner Sandoz, the generic unit of Novartis AG, received FDA approval in 2010 for the first generic version of Lovenox (enoxaparin, Sanofi SA). To produce its generic, the Cambridge, Mass.-based Momenta developed and patented a method to confirm that batches of enoxaparin contain a non-naturally occurring sugar that includes a 1 ,6-anhydro ring structure – as required by the FDA to establish equivalence. (See BioWorld Today, July 26, 2010.)

A few days after Amphastar Pharmaceuticals Inc., of Rancho Cucamonga, Calif., received approval in 2011 for its generic enoxaparin, Momenta sued the company and its partners, Watson Pharmaceuticals Inc., of Parsippany, N.J., and International Medical Systems Ltd., of Riverside, Calif., for infringing its method claims.

Since the equivalence testing is needed for each batch of enoxaparin that's manufactured and alternative testing methods are available, Momenta argued that Amphastar's infringement didn't reach Hatch-Waxman's safe harbor. A federal district court agreed, issuing a preliminary injunction to prevent Amphastar from using Momenta's patented testing method.

But the Federal Circuit said the safe harbor doesn't draw a line between pre- and post-approval infringement. And even though Amphastar isn't required to submit the results from its ongoing batch testing to the FDA, it is required to keep them as proof of compliance. Thus, the testing data are necessary to maintain the FDA's approval of the abbreviated new drug application (ANDA), the court ruled.

The safe harbor also doesn't mandate the use of a noninfringing alternative, Judge Kimberly Moore wrote in the majority opinion. She justified her opinion, saying it "avoids the situation here, where a drug has received approval, but is nevertheless kept from the market based on an FDA-mandated testing requirement" that's protected by patents.

Rader disagreed, calling Amphastar a trespasser. Noting that the company, as the first ANDA filer for enoxaparin, failed to develop its own equivalence test, Rader said Amphastar "instead delights in trespassing and refuses to pay a reasonable royalty to make the trespass lawful."

The court's majority opinion allows this "arrogance to continue," Rader said, adding that "Amphastar is only able to compete with Momenta by taking its patented invention."

Holding that patent claims related to quality control testing methods are not infringed under the safe harbor provisions, the Federal Circuit opens the harbor to infringement of other manufacturing method claims, Webster said.

"Once you expand the safe harbor to post-marketing approval activity, what is left?" she asked. "I'm not sure," she added.

In vacating the injunction, the Federal Circuit awarded court costs to Amphastar and handed the case back to the district court, suggesting that it consider summary judgment of noninfringement. Meanwhile, Momenta is reviewing the opinion and considering its options, which include requesting an en banc decision from the Federal Circuit or appealing to the Supreme Court.

DoD Stops Work on Ebola Contracts

Although sequestration with its sweeping across-the-board cuts in defense and discretionary spending isn't supposed to hit until January 2013, some drugmakers working under Department of Defense (DoD) contracts are already feeling the pain.

Sarepta Therapeutics Inc., of Cambridge, Mass., and Tekmira Pharmaceuticals Corp., of Vancouver, British Columbia, were among the contractors receiving temporary stop-work orders from DoD last week. Both Sarepta and Tekmira were working on projects related to the Ebola virus.

In issuing the orders, the DoD cited recently imposed funding constraints and indicated it would make a decision by Sept. 1 whether to continue the contracts, Tekmira President and CEO Mark Murray said.

It's unclear whether the stop-work orders are in preparation for the sequestration, which will automatically take effect unless Congress trims $1.2 trillion from the deficit or somehow overrides the measure before the new year. With five months left before sequestration become reality, many federal agencies and departments are considering where to make the cuts. DoD did not respond to a request for comment. (See BioWorld Today, Aug. 2, 2012.)

The drugmaker received an SEC subpoena in July seeking documents related to FCPA compliance, Teva indicated in an SEC filing last week. In addition to working with the government, Teva said it has hired independent counsel to help conduct a voluntary investigation into certain business practices that may have FCPA implications.

Several drugmakers have come under scrutiny since the SEC and Department of Justice prioritized enforcement of the FCPA, which prohibits firms from bribing government or corporate officials overseas in an attempt to gain business or other favors. (See BioWorld Today, Aug. 16, 2010, and Nov. 18, 2011.)

New Bills Introduced

Time may run out for new drug-related bills recently introduced in the House, as the clock is ticking down on the 112th session of Congress.

Rep. Ron Paul (R-Texas) last week introduced H.R. 6342 to give terminally ill patients access to investigational drugs and devices. The bill would allow the importation, distribution and sale of the experimental products for terminally ill patients who give informed consent. The bill was referred to the House Energy and Commerce Committee.

Another recently introduced bill, the Cure for AIDS Act, or H.R. 6187, calls for a $100 million, five-year appropriation to establish an AIDS cure research program at the Department of Defense. The program would fund research on new antiretrovirals, vaccine development and investigations into novel approaches to addressing disease progression. The bill, introduced by Rep. James Himes (D-Conn.) and Rep. Barbara Lee (D-Calif.), was referred to the House Armed Services Committee, as well as Energy and Commerce.

Final Rules Released

The Patent and Trademark Office (PTO) published final rules in Monday's Federal Register to implement the America Invents Act provision on certification of prior art and written statements. The law allows submission of patent owner statements about claim scope that were made in a federal court or a PTO proceeding and defines how the PTO can use the information during ex parte re-examination, inter partes re-examination and post-grant review. The provision becomes effective Sept. 16.

The Small Business Administration is seeking comments on its final policy directive to implement changes in the Small Business Innovation Research grant program. The directive was published in Monday's Federal Register. Comments are due Oct. 5. (See BioWorld Today, June 11, 2012.)